As April 15 approaches, many New Jersey Residents are taking advantage of a number of tax benefits
For homeowners, paying a mortgage, the bulk of that mortgage payment goes toward interest, and that interest is deductible. You have two options:
- Standard deduction or add up the deductible items and use that full amount. The amount of the standard deduction depends on your filing status. Deductible items include property tax, mortgage interest, state and local taxes
- Itemize deductions, which you would normally do when it exceeds the standard deduction. These are a few itemized deductions:
- Had large uninsured medical and dental expenses
- Paid interest or taxes on your home
- Had large unreimbursed employee business expense
- Had large uninsured casualty or theft losses, or
- Made large charitable contributions
- Deduct the cost of some energy efficiency improvements, for example, adding insulation or replacing old windows might qualify for a tax credit
If you are 65 and older, The Senior Freeze Property Tax Program reimburses eligible New Jersey residents who are senior citizens or disabled persons for property tax increases on their home.
Now, if you rent, you’re probably better off taking the standard deduction. Itemizing doesn’t pay. However, 18% of the rent paid during the year is considered as property taxes paid. To be eligible:
- this must be your only residence
- building is subjected to local property taxes
- Your apartment contains its own separate kitchen and bathroom that arenot shared with others in the building.
Always ask a Financial Professional for advice about your specific situation, but to me it doesn’t really matter how you explain it, home mortgages are a lot less, if you’re tired of throwing away money on rent, home ownership is more affordable today than in many years.